And if you watch the evolution of Candidate Obama, even as a Senate candidate, this is somebody who was fiercely idealistic, protective of your privacy. And now, in one way or another, he is governing a surveillance state, for a better word.

And he is looking here in these proposals that Jim has been talking about -- he is looking for a way to thread the needle, so he can say, look, I'm not snooping on your phone calls. And I guarantee you he is going to talk about that today.

I am not snooping on your phone calls, but I need to keep this country safe. And it occurs when you move into that Oval Office and, every morning when you wake up and you are behind that desk and that director of the Central Intelligence Agency comes to you with a threat matrix and you see what people are trying to do to this country, it tends to change you.

And I think we've seen that shift in the president, but he also remains the constitutional scholar who doesn't want to intrude on your privacy.

So, he's trying to find this balance between national security and privacy. And I think he's having a rough time. And I think his administration is having a rough time in trying to figure out how to do this itself. BLITZER: I think it is fair. I'll be surprised if he satisfies everyone. The critics on the left will be upset, still. The critics on the right will still be upset.

BORGER: Or even inside his own administration, Wolf, there's disagreement.

BLITZER: Yeah, he's trying to walk that fine line.

James "Spider" Marks is here, retired U.S. Army general, CNN military analyst.

From your perspective, based on what we know and we have the rough outlines of what the president is going to say, he'll fill in the blanks with some of the details, is this an acceptable compromise, shall we say, even though it's not going to satisfy the critics on the right or the left?

JAMES "SPIDER" MARKS, CNN MILITARY ANALYST: It's acceptable if it can work.

Clearly, the president has laid down some markers here, and the Congress has to get onboard. And we've seen the dysfunction of this Congress; let's call it like it is.

It's easy to punt this thing down the road, so the president looks very presidential, if you will allow me that. He can come up, very magnanimous. We need to make some changes and swiftly kind of move this thing over to the other side a little bit.

But the Congress is going to have to get on board. And, so, the president can have it both ways.

We can maintain data collection, which, as we've discussed, will always be in place. Every keystroke is captured. So that exists.

How that will occur, in the interim, there will be no changes. I don't know that there's really a compromise. There will be no change.

BLITZER: Between now and the end of March.

MARKS: There will be no changes.

And, beyond that, Wolf, I have very little belief that anything is really going to substantively going to change in order for our abilities to go after data as necessary.

Now, without getting into too much of the arcana of how this works, but once you get into networks, you can have two-hop (ph) networks. I talk to Gloria. Who does Gloria talk to? That's the second "hop." That's good.

But I can't go after those guys that they talked to. Well, let's see how that really works.

So where that data exists, where it ultimately will exist is the question right now.

BORGER: Nobody wants to hold it, right?

MARKS: Oh, absolutely. And as you've indicated, it's the hot potato. Where's this going to be?

The providers don't want to hold it, because they want to make room for more. This is an incredibly dynamic cell environment that we're talking about.

SCIUTTO: And it's interesting, because he has to make this case not only to the American people but to the international, foreign leaders and public, right? They're --

BLITZER: How far will he go in the speech today, based on what we know, in ensuring Angela Merkel and other friendly leaders the U.S. is not going to eavesdrop, listen in on their private phone conversations on their cell phones?

SCIUTTO: I have been told that that was -- they have decided for some time that they're going to set limits, severe limits, on spying on foreign leaders.

The president's determined that it's just not worth it, frankly, and that the damage done is too great to justify any fringe benefits from doing that kind of monitoring.

I'm also told that the moment that really made a difference was the Angela Merkel moment. They have a particularly close personal relationship.

Germany is an extremely close ally in terms of national security issues, economic issues. When that blew up, Obama, the Obama White House, said we really have to do something.

And I think you're going to see some real limits placed on foreign leaders.

Just want to recap. We are waiting for the president. He's going to go to the microphone there at the Justice Department, announce the reforms that he's accepted as far as NSA surveillance is concerned and where we are moving forward, where the United States will be on this very, very sensitive issue.

Do we expect the president specifically to acknowledge in this address that the United States over the years has eavesdropped, has listened in on phone conversations of world leaders, especially allied world leaders?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: I think the White House has just about acknowledged that without saying it explicitly, Wolf.

And I think when the president goes out there and says we are going to be curtailing that surveillance activity, that is in and of itself an acknowledge they have been spying on world leaders.

And just for all intents and purposes, we can report they have been doing that.

But to Jim's point, this has been an embarrassment, not only in Europe but across Latin America, Brazil, leaders in Mexico, across the globe have been very upset with this White House because of that surveillance program on heads of state as they call them here.

But one thing that we should also mention, Wolf, that we haven't talked about so far is that the president is also expected to announce a privacy advocate to the surveillance court, something that also did not exist before today.

And from what I understand from talking to administration officials, a lot of these changes are going to happen, effective immediately.

So, for example, the requirement that the NSA has to go to the Federal Surveillance Court in order to access the metadata archives and collection systems, that goes into effect, effective immediately, according to administration officials.

And as for this privacy, that is something that did not exist before, but, again, just like the storage of the data being outside of government hands, the details have not been worked out yet.

Who are these privacy advocates going to be? How is it that they're going to operate before the surveillance court? Is it sort of like having a defense attorney for people's privacy concerns? That is likely not to be the case.

And keep in mind, some people have been saying, this is sort of glossing over and punting and that sort of thing.

Keep in mind that the Federal Surveillance Court judges sent a letter to Dianne Feinstein, the chair of the Senate intelligence committee, just recently, saying, hey, don't put a privacy advocate on the court. Don't do some of these changes that you're talking about.

So, what the president is going to outline does go beyond what the surveillance court wants in many cases, Wolf.

BLITZER: All right, hold on. Everyone, hold on.

We're standing by to hear directly from the president. I'm curious. Will the president mention the name Edward Snowden when he speaks to the world in just a few minutes?

It's clear to all of us that, if Edward Snowden had not leaked all this sensitive information, the president probably would not be releasing these reforms today, for good of for bad.

We'll hear what he says, if he mentions that name, Edward Snowden.

Much more of our special coverage, right after this.

(COMMERCIAL BREAK)

BLITZER: Welcome back to our special coverage.

The president of the United States about to announce major changes in surveillance and intelligence reform, the NSA program under a lot of criticism from the far left, far right, folks in the middle, as well.

The president is coming forward with a series of changes. How far he goes, we'll find out pretty soon.

Bob Baer is a CNN national security intelligence analyst. What do you think about all these changes? Is he going far enough, going too far? What's your assessment?

BOB BAER, CNN NATIONAL SECURITY ANALYST: Wolf, I think he is doing absolutely right. We need warrants based on probable cause to get into meme metadata. It is the way 9/11 was cracked so quickly. The FBI got into the metadata, after attack or a crime has occurred, you have to have the stuff available. You can't get rid of it.

Number two, we may say we are not going to spy on the Germans on Merkel and the rest of it, that's fine. It sounds good.

At the end of the day, we have to listen to German telephones. 9/11 was hatched in Germany. I think the president is making the right decisions. I don't necessarily trust the NSA and the FBI. So, put them under a FISA court.

BLITZER: We see the FBI director and the attorney general. They are all there getting ready to hear the president. When they walk in, you know the president will be following shortly.

This whole notion, Bob, we expect the president to be speaking momentarily, this whole notion of spying on foreign leaders, spying, if you will, on the American public, the surveillance, when we hear the phrase "metadata," what does that mean in practical terms when you're talking about preventing another 9/11?

Because that's -- it's a complicated system that they have there.

BAER: Really, it's based on link analysis. I worked for the special tribunal in the Hague investigating the Hariri murder and after he was --

BLITZER: The Hariri murder in Lebanon?

BAER: -- killed.

The prime minister, yes, of Lebanon, and we got in the telephone data and went through it and pieced together, and only thanks to these telephone calls, the records of them, who killed Hariri.

And it was a group inside Hezbollah. And without that stuff, we would have never made the case.

I just -- I can't -- I believe in privacy, too, but you need to keep these records around. They are great for after-the-fact.

They don't do much for you to predict a crime, but after? Absolutely.

BLITZER: So, if the NSA is not going to keep all these records and the private phone companies aren't going to keep these records, where are these records going to be kept?

BAER: Under some sort of a judicial authority, whether you put it out in Utah in this NSA place or it doesn't matter where, you just need to have a report of who gets into the databases and under what authority.

And it has to be under judicial authority, again, probable cause.

And without that, we just don't want the FBI or the CIA snooping around these records on fishing expeditions. But with a warrant, I think it's justified.

BLITZER: Because, as you know, and I'm going to bring Jim Sciutto into this conversation, a lot of folks have criticized the FISA courts, the Foreign Intelligence Surveillance Act courts, because they've almost always been a rubber stamp.

The administration says, we need to go listen in, we need a wiretap. And they say, OK, do it. You can count on one hand the times that they've said, it's not a good idea.

By adding a public advocate to that process, you get to hear a different side of the story and it may not necessarily continue to be that so-called rubber stamp.

SCIUTTO: It makes it a real court, right? What other court in the country only has one side represented?

So, you need to have the other side. It frankly wouldn't be balanced. You will have the prosecutors. You'll have the judge.

But it does give you at least an adversarial process, which is a bedrock of the way we do things in this country.

And I think when you look at the numbers of the FISA court, they tend to approve 99.9 percent of these requests as it is.

Putting an advocate in there at least gives another argument, but I can't imagine that's going to change that dynamic too much, because at the end of the day, they don't actually come with as many requests, I think, as Americans imagine, that those queries tend to have the backing you need.

At least by putting in this process, having a public advocate, it will increase confidence.

And what administration officials have said repeatedly, a lot of this is about building confidence. There is an impression out there that this is a mass, domestic-spying program, a mass foreign-spying program, and they want to get across that that's not the case.

BORGER: But one man's safeguard is another man's roadblock, right? And so the FISA court would argue that they actually do consider both sides in every decision that they make. So, if you add in another advocate and another side --

BLITZER: Hold on, there he is. The president is now at the Justice Department, getting a little bit of a standing ovation before his remarks. Let's listen in.

OBAMA: Thank you. Thank you so much.

Please have a seat. At the dawn of our republic, a small secret surveillance committee born out of the Sons of Liberty was established in Boston. And the group's members included Paul Revere. At night, they would patrol the streets, reporting back any signs that the British were preparing raids against America's early patriots.

OBAMA: Throughout American history intelligence has helped secure our country and our freedoms. In the Civil War Union balloons reconnaissance tracked the size of Confederate armies by counting the number of campfires.

In World War II, code breakers gave us incites into Japanese war plans. And, when Patton marched across Europe, intercepted communications helped save the lives of his troops.

After the war, the Iron Curtain and nuclear weapons only increased the need for sustained intelligence gathering. And so, in the early days of the Cold War, President Truman created the National Security Agency, or NSA, to give us insights into the Soviet block and provide our leaders with information they needed to confront aggression and avert catastrophe.

Throughout this evolution, we benefited from both our Constitution and our traditions of limited government. U.S. intelligence agencies were anchored in a system of checks and balances with oversight from elected leaders and protections for ordinary citizens.

Meanwhile, totalitarian states like East Germany offered a cautionary tale of what could happen when vast, unchecked surveillance turned citizens into informers, and persecuted people for what they said in the privacy of their own homes.

In fact, even the United States proved not to be immune to the abuse of surveillance. In the 1960s, government spied on civil rights leaders and critics of the Vietnam War. And partly in response to these revelations, additional laws were established in the 1970s to ensure that our intelligence capabilities could not be misused against our citizens.

In the long, twilight struggle against communism, we had been reminded that the very liberties that we sought to preserve could not be sacrificed at the altar of national security.

OBAMA: After the fall of the Soviet Union left America without a competing superpower, emerging threats from terrorist groups, and the proliferation of weapons of mass destruction placed new, and in some ways, more complicated demands on our intelligence agencies.

Globalization and the Internet made these threats more acute as technology erased borders and empowered individuals to project great violence as well as great good.

Moreover, these new threats raised new legal and new policy questions. For while few doubted the legitimacy of spying on hostile states, our framework of laws was not fully adapted to prevent terrorist attacks by individuals acting on their own, or acting in small ideological -- ideologically driven groups on behalf of a foreign power.

The horror of September 11th brought all these issue to the fore.

Across the political spectrum, Americans recognized that we had to adapt to a world in which a bomb could be built in a basement and our electric grid could be shut down by operators an ocean away.

We were shaken by the signs we had missed, leading up to the attacks. How the hijackers had made phone calls to known extremists and travelled to suspicious places.

So we demanded that our intelligence community improved its capabilities and that law enforcement changed practices to focus more on preventing attacks before they happened, and prosecuting terrorists after an attack.

It is hard to overstate the transformation America's intelligence community had to go through after 9/11.

OBAMA: Our agencies suddenly needed to do far more than the traditional mission of monitoring hostile powers and gathering information for policy makers, instead they were now asked to identify and target plotters in some of the most remote parts of the world and to anticipate the actions of networks that by their very nature cannot be easily penetrated with spies or informants.

And it is a testimony to the hard work and dedication of the men and women of our intelligence community that over the past decade, we've made enormous strides in fulfilling this mission.

Today, new capabilities allow intelligence agencies to track who a terrorist is in contact with and follow the trail of his travel or his funding.

New laws allow information to be collected and shared more quickly and effectively between federal agencies and state and local law enforcement. Relationships with foreign intelligence services have expanded, and our capacity to repel cyber-attacks have been strengthened.

And taken together, these efforts have prevented multiple attacks and saved innocent lives, not just here in the United States, but around the globe.

And yet, in our rush to respond to a very real and novel set of threats, the risk of government overreach, the possibility that we lose some of our core liberties in pursuit of security, also became more pronounced.

We saw, in the immediate aftermath of 9/11, our government engaged in enhanced interrogation techniques that contradicted our values.

As a senator, I was critical of several practices, such as warrantless wiretaps. And all too often, new authorities were instituted without adequate public debate.

OBAMA: Through a combination of action by the courts, increased congressional oversight, and adjustments by the previous administration, some of the worst excesses that emerged after 9/11 were curbed by the time I took office. But a variety of factors have continued to complicate America's efforts to both defend our nation and uphold our civil liberties.

First, the same technological advances that allow U.S. intelligence agencies to pinpoint an Al Qaida cell in Yemen or an e- mail between two terrorists in the Sahel, also mean that many routine communications around the world are within our reach. And at a time when more and more of our lives are digital, that prospect is disquieting for all of us.

Second, the combination of increased digital information and powerful supercomputers offers intelligence agencies the possibility of sifting through massive amounts of bulk data to identify patterns or pursue leads that may thwart impending threats. It's a powerful tool. But the government collection and storage of such bulk data also creates a potential for abuse.

OBAMA: Third, the legal safeguards that restrict surveillance against U.S. persons without a warrant do not apply to foreign persons overseas. This is not unique to America; few, if any, spy agencies around the world constrain their activities beyond their own borders. And the whole point of intelligence is to obtain information that is not publicly available. But America's capabilities are unique. And the power of new technologies means that there are fewer and fewer technical constraints on what we can do.

That places a special obligation on us to ask tough questions about what we should do.

And, finally, intelligence agencies cannot function without secrecy, which makes their work less subject to public debate. Yet, there is an inevitable bias, not only within the intelligence community, but among all of us who are responsible for national security, to collect more information about the world, not less.

So, in the absence of institutional requirements for regular debate - and oversight that is public, as well as private, though classified, the danger of government overreach becomes more acute.

It is particularly true when surveillance technology and our reliance on digital information is evolving much faster than our laws.

For all these reasons, I maintained a healthy skepticism toward our surveillance programs after I became president. I ordered that our programs be reviewed by my national security team and our lawyers, and in some cases I ordered changes in how we did business.

We increased oversight and auditing, including new structures aimed at compliance. Improved rules were proposed by the government and approved by the Foreign Intelligence Surveillance Court. And we sought to keep Congress continually updated on these activities.

OBAMA: What I did not do is stop these programs wholesale, not only because I felt that they made us more secure, but also because nothing in that initial review and nothing that I have learned since, indicated that our intelligence community has sought to violate the law or is cavalier about the civil liberties of their fellow citizens.

To the contrary, in an extraordinarily difficult job, one in which actions are second-guessed, success is unreported, and failure can be catastrophic, the men and women of the intelligence community, including the NSA, consistently follow protocols designed to protect the privacy of ordinary people.

They are not abusing authorities in order to listen to your private phone calls, or read your e-mails. When mistakes are made -- which is inevitable in any large and complicated human enterprise -- they correct those mistakes. Laboring in obscurity, often unable to discuss their work even with family and friends, the men and women at the NSA know that if another 9/11 or massive cyber-attack occurs, they will be asked, by Congress and the media, why they failed to connect the dots.

What sustains those who work at NSA -- and our other intelligence agencies -- through all these pressures is the knowledge that their professionalism and dedication play a central role in the defense of our nation.

Now, to say that our intelligence community follows the law, and is staffed by patriots, is not to suggest that I, or others in my Administration, felt complacent about the potential impact of these programs.

OBAMA: Those of us who hold office in America have a responsibility to our Constitution, and while I was confident in the integrity of those in our intelligence community, it was clear to me in observing our intelligence operations on a regular basis that changes in our technological capabilities were raising new questions about the privacy safeguards currently in place.

Moreover, after and extended review of our use of drones in the fight against terrorist networks, I believed a fresh examination of our surveillance programs was a necessary next step in our effort to get off the open-ended war footing that we've maintained since 9/11.

And for these reasons, I indicated in a speech at the National Defense University last May, that we needed a more robust public discussion about the balance between security and liberty.

Of course, what I did not know at the time, is that within weeks of my speech, an avalanche of unauthorized disclosures would spark controversies at home and abroad that have continued to this day.

And give the fact of an open investigation, I'm not gonna dwell on Mr. Snowden's action or his motivations. I will say that our nation's defense depends, in part, on the fidelity of those entrusted with our nation's secrets.

If any individual who objects to government policy can take it into their own hands to publicly disclose classified information, then we will not be able to keep our people safe, or conduct foreign policy.

Moreover, the sensational way in which these disclosures had come out has often shed more heat than light, while revealing methods to our adversaries that could impact our operations in way that we may not fully understand for years to come.

Regardless of how we got here, though, the task before us now is greater than simply repairing the damage done to our operations or preventing more disclosures from taking place in the future.